Chicago Transit Board
October 18, 2006
Thank you Chairman Brown.
Good afternoon.
Last Thursday, I released my tenth budget recommendation since coming to the
CTA in 1997.
As this Board is well aware, for the past decade, CTA’s fundamental challenge
has been to grow ridership and expand service for our customers even while our
inflation-adjusted public funding has continued to decline under a 1983 state law.
Current funding resources are insufficient just to maintain transit operations in the
future, let alone increase service.
The status quo is not an option if we are serious about sustaining economic
growth and fighting traffic congestion.
The good news is that the RTA has recognized the need to change course and
has been leading the effort to build consensus in the region for improved and
expanded public transit.
In recognition of that effort, and to adhere to the funding marks RTA adopted for
the CTA in September, my budget recommendation anticipates that new funding
sources will be identified in 2007 and will enable the CTA to maintain service and
fares at their current levels.
My recommendations reflect CTA’s ongoing efforts to work smarter, cut
expenses and seek innovative revenue sources.
But even with these efforts, $580.5 million in public funding is needed for
operations and to meet retiree pension and healthcare liabilities growing through
an arbitration award and under state law.
At present, only $470.3 million has been identified. If no additional funding is
obtained, CTA will be required to take actions to balance its operating budget
during 2007.
RTA Chairman Jim Reilly has expressed confidence, however, that a solution will
be found and I personally share his confidence.
While we wait for a long-term solution, we have worked to preserve service in an
increasingly difficult financial environment with escalating fuel, security,
healthcare and benefit expenses. To do so, we have had to take various short-
term, unsustainable measures with their own consequences.
For example, over the past two years, we have delayed infrastructure
improvements by reluctantly diverting $60 million from capital projects to fill
operating budget gaps – on top of not receiving over $350 million in state capital
funding after Illinois FIRST expired.
CTA has also increased operating revenues by raising cash fares twice, from
$1.50 to $1.75 and then to $2.00, a 33-percent jump since 2003.
Fare increases of this magnitude cannot continue indefinitely without driving
people away from transit.
We are also always working to improve efficiency. Since 1997, we have pursued
major efficiency initiatives that cumulatively have saved over $1 billion. Based on
recommendations made through a recent independent review of CTA by AECOM
Consult, CTA is taking further steps to be even more cost effective.
In addition to our operating needs, CTA also faces a severe capital funding
shortfall that threatens the ability to reach a state of good repair.
In just the past two years, CTA’s capital budget has been slashed by over $400
million. Not only has capital money been used to cover operating budget
shortfalls, but new state capital funding for transit has also stopped with the
expiration of Illinois FIRST.
This state legislation, which funded transit, roads and other infrastructure
improvements, had provided as much as $176 million annually for critical CTA
capital projects.
Capital funding shortfalls have resulted in deferred maintenance, delays in
infrastructure improvements, and difficulty in planning, financing and
implementing multi-year projects. While Illinois FIRST funding for transit has
ended, dedicated state funding for roads has continued to flow.
Following a rigorous 18-month assessment, the CTA estimates that an $8 billion
capital investment is needed in the next five years in order to continue to provide
safe and reliable service and meet growing transit needs. Including all planned
rail line extensions would increase the figure to more than $10 billion.
Based on available funding, the proposed five-year Capital Improvement Plan
totals $2.7 billion with $1 billion programmed for vital system expansion, including
completing the Brown Line capacity expansion project; and the other $1.7 billion
in projects to renew CTA assets, replace the fleet and bring the system to a state
of good repair.
Last week, this Board approved a bond issuance which is vital to fund the capital
program.
Unlike the past two years, the proposed program does not divert scarce capital
funds to balance the operating budget. With the loss of Illinois FIRST, the CTA’s
capital program is shrinking and cannot continue to be used to shore up an
increasing operating deficit.
The region cannot afford to take transit for granted – after all, the CTA alone is a
system whose weekday ridership still exceeds the population of all but four U.S.
cities.
With proper funding, CTA could advance more rapidly toward a state of good
repair, accelerating the renovation of century-old rail lines, replacement of worn-
out buses and trains, and refurbishment of maintenance facilities.
Service frequency and hours of operation could expand to tap new markets,
relieve overcrowding, and increase transit’s competitiveness with the automobile.
So what is the bottom line for the 2007 budget? It is that transit is at a
crossroads.
A healthy transit system curbs traffic congestion and pollution while improving
mobility, economic competitiveness and the quality of life for everyone. With
more funding, the CTA and our sister agencies will be able to do more and
ridership will grow. Without it, the current system cannot be maintained and will
have to shrink.
We expect to know the answer in 2007. By working together and addressing the
funding challenge on a regional, bipartisan basis, I am confident that the region
will choose the right path.
___
As I have stated repeatedly, continued investment in CTA’s fleet and facilities is
crucial.
In 1998, CTA had funding to cover just 19 percent of its capital needs.
Through the Illinois FIRST program, in 2004 CTA had capital funds available to
cover nearly 60 percent of its need.
The CTA received approximately $1 billion over five years in Illinois FIRST
funding designated for capital improvements to its rail and bus system.
To demonstrate its ability to efficiently administer this level of funding, CTA set a
goal to obligate 80 percent of these funds, and spend 50 percent on
infrastructure improvements over a five-year period. As of December 31, 2004,
CTA exceeded these goals by expending 64.2 percent of Illinois FIRST funds
and obligating 81.5 percent.
Securing capital funding is only half the battle. How to use it in the time allotted
and deliver results requires a great deal of planning and coordination. By
surpassing these 80/50 goals, CTA has proven its ability to fully leverage and
effectively manage funding of this magnitude and is in a position to justify
additional federal and state funding to continue the long-term goal of bringing
CTA’s infrastructure to a state of good repair.
Illinois FIRST funding has contributed to large-scale infrastructure improvements
such as the successful rehabilitation of the 54th/Cermak branch of the Blue Line,
new bus purchases to upgrade the fleet, capacity expansion on the Brown Line
and rehabilitation of the Dan Ryan branch of the Red Line.
Funding from Illinois FIRST has not only supported capital improvement projects,
but has helped the CTA secure additional federal funding by providing the
necessary state funding match.
Capital improvements provide significant benefits to our customers. In addition,
quality, affordable transit helps revitalize neighborhoods, drives the entire
region's economic growth, reduces traffic congestion and improves air quality.
More and more people are riding the CTA, demonstrating that investment in
transit attracts customers. We must continue to invest in our system so that it
can meet their increased demand and provide a convenient, affordable option to
driving.
As always, I look forward to working with this Board in its consideration of my
recommendations as it decides on the budget for the coming year.
And on that note, I will continue with an update on work at Clark Junction.
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Work continues throughout the Clark Junction corridor to upgrade the signal
system and install additional crossovers. Currently crews are replacing nearly a
dozen switches that had been installed but were not performing satisfactorily on
the elevated track.
Crews will continue to test the performance of the replacement switches, as well
as those that have already been installed to determine if additional replacements
are necessary.
The investment in Clark Junction will improve options for the upcoming three-
track operation.
Next year the Purple Express, Brown and Red Line trains will lose one of the four
tracks throughout the Clark Junction corridor due to construction at the Belmont
and Fullerton stations.
Because elevators will be installed at Belmont and Fullerton to make the stations
accessible to customers with disabilities, the tracks along the platforms need to
be realigned to allow room for the elevators.
The operational improvements made throughout Clark Junction will allow both
the Belmont and Fullerton stations to remain open throughout construction and
help CTA to better manage rail service during three-track operation.
Once CTA is satisfied that the newly installed signal system is properly
configured to manage the volume of train traffic and that operational staff are
prepared to coordinate traffic through the reconfigured junction, three-track
operation will begin, continuing until the Brown Line capacity expansion project is
completed in 2009.
For CTA, providing rail service with 25 percent less track capacity will present
significant challenges.
For customers it will mean slower service on the Red, Brown and Purple Line
Express trains as they travel through the corridor bounded by the Brown Line
Southport station, the Red Line Addison station and the Brown Line Armitage
station.
Currently CTA rail operations and planning staff are developing
recommendations for service throughout the corridor with the constraints of
three-track operation, however, it is important to keep in mind that losing one
track will increase travel times regardless of the adjustments that will be made.
Continued investment in the system is critical to maintaining the current level of
service and being able to improve service in the future.
We appreciate the continued patience of our customers as we work to upgrade
the system while maintaining service.
___
Work is also moving ahead on the connecting tunnel to be built between the Red
and Blue Line subways following last month’s approval of the construction
contract.
This coming Monday, October 23, the Red Line’s Washington station and
pedestrian transfer tunnel between the Red and Blue Lines will close for
construction of the connection tunnel.
During construction over the next two years, customers will continue to have
access to the State Street subway using the Lake station one block north of
Washington or the Monroe station one block south of Washington.
Red Line trains will continue normal operation through the State Street subway
with the exception of bypassing the Washington station.
As construction schedules are finalized, CTA will provide service information to
customers in advance via flyers, Customer Alerts posted at stations and on
trains, through press releases and on the CTA web site at transitchicago.com.
The construction work will result in a tunnel connecting the Red and Blue Line
subway tracks which will help improve rail service for customers by increasing
options to coordinate train traffic in both subway systems.
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And now, as is customary, I have an update for the Board on ridership.
In August, 42.1 million rides were provided during the month, an increase of 0.2
percent compared to August 2005.
Systemwide, ridership in August decreased by 0.3 percent on weekdays,
Saturdays increased by 2.9 percent and Sundays increased by 2.1 percent.
The bus system provided 24.7 million rides in August 2006, a 3.2 percent
decrease from last year.
Weekdays were down 3.3 percent; Saturdays were down 1.9 percent and
Sundays were down 3.2 percent.
On a promising note, however, ridership has increased on the 13 new and
reconfigured bus routes introduced on June 18 as part of the West Side/Near
West Suburban service enhancements. We will continue to monitor the
performance of these routes as the experimental service continues.
On the year, the bus system is down 1.7%.
The rail system provided 17 million rides in July, an increase of 6.8 percent over
last year. Weekdays were up 5.5 percent, Saturdays were up 12.4 percent and
Sundays were up 13.7 percent.
On the year, the rail system is up 6 percent.
Year-to-date, CTA has provided 327.3 million rides, an increase of 1.1 percent
compared to 2005.
We remain focused on our goal of posting ridership increases in eight of the past
nine years and we will continue our efforts to increase ridership by providing
service for our customers that is on time, clean, safe and friendly.
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In closing, as always, I thank the Board for supporting CTA’s mission of
delivering quality, affordable transit services that link people, jobs and
communities.
I thank you and this concludes my report.
President’s Board Report – October 2006
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